Probability of Financial Distress (%) measures the probability that a company will go bankrupt in the upcoming year given its current financial position. A higher ratio indicates a larger probability of bankruptcy for the company, while a lower ratio indicates a healthier fundamental. As of today, Avalara's Probability of Financial Distress (%) is 0.00%.
Like the Altman Z-Score, the PFD measures a company's bankruptcy risk. However, the main drawback of the Z-score is it does not apply to banks and insurance companies. According to Investopedia, the concept of "working capital" does not apply to banks and insurance companies, as financial institutions do not have typical current assets or current liabilities like inventories or accounts payable.
Competitive Comparison
For the Software - Application subindustry, Avalara's Probability of Financial Distress (%), along with its competitors' market caps and Probability of Financial Distress (%) data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Avalara Probability of Financial Distress (%) Distribution
For the Software industry and Technology sector, Avalara's Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where Avalara's Probability of Financial Distress (%) falls into.
Avalara Probability of Financial Distress (%) Calculation
Probability of Financial Distress (%) (PFD) was developed by John Campbell, Jens Hilscher and Jan Szilagyi in their Search of Distress Risk. It measures the probability that a company will go bankrupt within the next 12 months given its current financial position.
The Probability of Financial Distress (%) was obtained by a logit probability model based on eight explanatory variables. The logit formula to compute the probability of financial distress (LPFD) is given below:
| LPFD | = | -20.12 * NIMTAAVG | + | 1.60 * TLMTA | - | 7.88 * EXRETAVG | + | 1.55 * SIGMA | - | 0.005 * RSIZE | - | 2.27 * CASHMTA | + | 0.070 * MB | - | 0.09 * PRICE | - | 8.87 |
| = | 0.00 |
The Probability of Financial Distress (%) (PFD) was then obtianed by:
| PFD | = | 1 | / | (1 + e^(-LPFD)) | * | 100% |
| = | 0.00% |
The eight explanatory variables are:
1. NIMTAAVG = Net Income to Market Total Assets
*Note that for companies reported quarterly, geometrically declining weighted quarterly Net Income data in latest four quarters are used.
2. TLMTA = Total liabilities to Market Total Assets
3. CASHMTA = Cash to Market Total Assets
For non-financial companies, CASHMTA is measured as:
4. EXRETAVG = Excess Return compared to the S&P 500
EXRETAVG is the weighted excess return compared to the S&P 500 in past 12 month. Geometrically declining weights are imposed on the monthly excess return to reflect lagged information. The weight is halved each quarter.
5. SIGMA = Standard Deviation of Daily Returns
For sigma, we use the annualized standard deviation of a company's returns over the past 92 days (or 63 trading days).
6. RSIZE = Relative Size
| RSIZE | = | log (Market Cap | / | Total Market Cap of S&P 500 companies) |
7. MB = Market to Adjusted Book Equity Ratio
8. PRICE
PRICE is measured as the log of the stock price, capped at log(15).
Avalara (NYSE:AVLR) Business Description
Traded in Other Exchanges
N/A
Address
255 South King Street, Suite 1800, Seattle, WA, USA, 98104
Avalara Inc provides compliance solutions. It provides software solutions that help businesses of all types and sizes comply with tax requirements for transactions worldwide. The company offers a broad and growing suite of compliance solutions for transaction taxes, such as sales and use tax, VAT, fuel excise tax, beverage alcohol, cross-border taxes, lodging tax, and communications tax. These solutions enable customers to automate the process of determining taxability, identifying applicable tax rates, determining and collecting taxes, preparing and filing returns, remitting taxes, maintaining tax records, and managing compliance documents. It generates revenue in the form of subscriptions and professional services.
Executives
| Marcela Martin |
director |
C/O SQUARESPACE, INC., 225 VARICK STREET, 12TH FLOOR, NEW YORK NY 10014 |
| Bruce T Crawford |
director |
255 SOUTH KING ST., SUITE 1800, SEATTLE WA 98104 |
| Srinivas Tallapragada |
director |
THE LANDMARK AT ONE MARKET STREET, #300, SAN FRANCISCO CA 94105 |
| Ross Tennenbaum |
officer: See Remarks |
255 S KING ST, STE 1800, SEATTLE WA 98104 |
| Brian Sharples |
director |
1250 CAPITAL OF TX HWY, BLDG 2, PLAZA 1, AUSTIN TX 78746 |
| Wp Avlr Holdco Llc |
10 percent owner |
C/O WARBURG PINCUS LLC, 450 LEXINGTON AVENUE, NEW YORK NY 10017 |
| Amit Mathradas |
officer: See Remarks |
255 S KING ST, STE 1800, SEATTLE WA 98104 |
| Kathleen Zwickert |
director |
255 S KING ST, STE 1800, SEATTLE WA 98104 |
| William Ingram |
officer: See Remarks |
C/O LEAP WIRELESS INTERNATIONAL, INC., 5887 COPLEY DRIVE, SAN DIEGO CA 92111 |
| Dooren Pascal Van |
officer: See Remarks |
255 SOUTH KING ST., SUITE 1800, SEATTLE WA 98104 |
| Rajeev Singh |
director |
6222 185TH AVENUE NE, REDMOND WA 98052 |
| Marion R Foote |
director |
C/O KINETA, INC., 219 TERRY AVE. N., SUITE 300, SEATTLE WA 98109 |
| Chelsea R. Stoner |
director |
C/O AVALARA, INC., 255 SOUTH KING ST., SUITE 1800, SEATTLE WA 98104 |
| Jared R. Vogt |
director |
C/O AVALARA, INC., 255 SOUTH KING ST., SUITE 1800, SEATTLE WA 98104 |
| Daniel E. Manning |
officer: Chief Accounting Officer |
255 SOUTH KING ST., SUITE 1800, SEATTLE WA 98104 |
Avalara (NYSE:AVLR) Headlines
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